Solon wants simpler, fairer tax system

A LAWMAKER at the House of Representatives has filed a tax reform bill designed to lower personal income taxes (PIT) while broadening the value-added tax (VAT) base and adjusting excise taxes.

Albay Rep. Joey Salceda proposed House Bill No. 4688 or the Tax Reform for Acceleration and Inclusion to create a simpler and fairer tax system in line with President Rodrigo Duterte’s commitment to real positive change. Under the measure, a full and immediate adjustment in the PIT brackets will be implemented to correct the “income bracket creeping,” which Salceda described as one of the most “horrific and protracted” social injustices. “The Philippine PIT is the most regressive in the entire Asia. And we do this to the most dependable pillar of taxes — the employees whose share of nationbuilding is automatically withheld, with compliance at almost 99 percent since they have no choice,” Salceda explained.

At present, the Philippines has the second highest individual income tax rate at 32 percent in the Asean region, next to Thailand and Vietnam’s 35 percent.

The bill seeks to reduce the personal income tax maximum rate over time to 25 percent except for the highest income earners. To compensate for the foregone revenues from the PIT reform, offsetting measures include the expansion of the VAT base by limiting exemptions to raw food and other necessities.